Rockets My-Nority Tryouts

Potential partners face a steep ante

A couple of months ago Houston minority leaders cheered their apparent court victory over Les Alexander and the Houston Rockets. They had sued the basketball franchise owner to hold him to a campaign pledge that minority and women investors (MWDBEs) would get a 30 percent stake in lucrative food and beverage concessions when the just-named Toyota Center arena opens downtown.

Judging by stringent procedures recently issued to potential participants, the MWDBE celebrating may have been a bit premature. It just might be easier to try out for the team than make the cut as a business partner with Les.

Several sources claim that the only clear victors were the lawyers for the plaintiffs, including former city attorney Ben Hall, former city councilwoman Gracie Saenz and state Rep Ron Wilson. Although the attorneys and the Rockets won't confirm it, they are reported to have negotiated legal fees for their roles equal to 5 percent of the arena concession.

When the lawsuit was filed, Hall and Wilson had attacked state Senator Rodney Ellis and state Rep Sylvester Turner for selling out the black community as paid lackeys for the Rockets. Now it appears Hall, Saenz and Wilson will receive fees larger than anything Turner and Ellis have earned from the team.

Asked about the arrangement, Hall claimed that securities laws prevent him from discussing any aspects of the deal.

"It is a private offering and therefore it is subject to certain laws as to what can be publicly said about it," commented the attorney. "It's so easy, looking at Martha Stewart and what went on with her, that just to slightly violate these rules might jeopardize the entire offering."

Under terms of the legal agreement, each of the plaintiff organizations (the NAACP, LULAC, the Houston Area Urban League, the Ministers Association of Houston and the Hispanic Chamber of Commerce) will nominate five investors. The Rockets will pick one investor from each organization's list to receive 3 percent shares in the concession action at the arena. The investors selected must cough up $300,000 by September 1, with no financing assistance from the Rockets.

The Rockets also will use their own methods to pick another five investors. Those selections must include black, brown, Asian and women investors.

More costs come into play in these plans. According to a disgruntled participant, any investor wishing to get nominated by one of the five groups must pay a nonrefundable $3,000 fee, charged by Ben Hall's law firm to review the potential investor. There are no guarantees that the review will lead to either a nomination by the minority organizations or eventual selection by the Rockets. "Les got his nuts in a vice and now he's going to make it difficult for the investor groups," this source believes. "He's trying to weed out a lot of interest in this venture."

That reasoning ignores the fact that it is plaintiffs' attorney Hall -- not the Rockets organization -- charging the review fee.

Engineer Sonny Flores, a member of the Hispanic Chamber of Commerce, expressed shock when told that minority investors had to pay $3,000 even to be considered for the deal. He says he had been told all he needed to pay the Hall firm was $50 for printing expenses.

"I'm just thinking of all the phone calls the organizations have gotten from interested investors," says Flores, who doesn't think many will agree to pay three grand up front. "I'll tell you what, there are a lot of mullet schemes out there, but this one isn't going to go very far." -- Tim Fleck